College football gets tax breaks; fans ‘contribute’ millions for tickets

When 90,000 fans crowd into Ben Hill Griffin Stadium on the University of Florida campus this Saturday to watch their beloved Gators take on the South Carolina Gamecocks, it will be more than just a football game. For many, it will be one of the highlights of their year, a rollicking, emotional experience, with Florida in the hunt for a national championship.

But increasingly, that experience comes with a hefty and controversial price tag.

These days it takes more than a ticket to get into the stadium. Florida and scores of other football powerhouses require fans to make thousands of dollars in “donations” to their athletic departments before they even get a season ticket. The level of donation determines where fans sit. The more they give, the better the view. A seat in the prized Bull Gator section at Florida requires a $14,500 contribution.

Don’t think there isn’t a waiting line. Demand for football tickets almost always exceeds supply. In recent years, a new fan hoping to buy a season ticket to Florida games had to write Gator Boosters Inc., Florida’s non-profit booster club, a check for $1,800. That was the entry-level donation and does not include the cost of the ticket, which is hundreds of dollars more. To inch up the waiting line, Florida officials recommend boosting contributions even higher.

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The money adds up. Last year, Florida took in $17.5 million from its ticket contribution scheme, records show. Including luxury suites and other premium seats, the figure swells to nearly $35 million, equal to about one-third of the entire athletic budget. And that’s only one school.

Nearly every major football program – from South Carolina to Texas to the University of Southern California – now requires its fans to make an annual “contribution” to get a season ticket. In the mid-1980s, a congressional panel estimated ticket schemes raised $100 million annually. Today, that figure is closer to $500 million, interviews and records suggest.

Nearly all of the money is untaxed, part of a long, controversial history of tax breaks Congress has awarded to big-time college football even as the sport becomes more and more commercialized. Critics like John D. Colombo, a law professor and tax expert at the University of Illinois, say the tax breaks defy the laws of charity and highlight how Congress has carved up the tax code benefitting scores of special interests.

“The easy and direct answer is that it’s not charity,” Colombo said. “If you receive a quid pro quo, that is, something tangible, it’s considered not to be a donation. The IRS has held that position forever. And it has been upheld by the court. But Congress decided to act on its own and call the payments charitable contributions.”

Schools have different names for their mandatory ticket schemes, which mimic “personal seat licenses” used by professional teams. Some call them “premium seating programs.” Others call them “priority seating plans.” The University of California, Berkeley, calls its new plan an “endowment seating program.” Boosters who give $225,000 are able to guarantee themselves a seat at Cal football games for the next 50 years.

The purpose of the ticket schemes is to generate more revenue by taking advantage of the unprecedented demand for seats. Cal’s new seating plan has raised nearly $41 million in cash so far, according to university financial statements, with tens of millions more expected. The Southeastern Conference, which includes Florida, annually collects more than $100 million in seat donations, records show. At Louisiana State University, a perennial football power, contributions have more than doubled since 2005 – to $22.2 million annually, according to a state audit.

All of this money is tax free for the schools. And thanks to Congress, fans get to deduct 80 percent of their mandatory payments, just as if they were writing a check to the Salvation Army or the local food bank.

In the 1980s, the Internal Revenue Service moved to tax football ticket contributions in two rulings. The agency said the mandatory payments weren’t charitable gifts to the universities; instead, they represented the cost of securing a highly coveted season ticket. Therefore, the onus should be on the donors to prove otherwise, agency officials argued, just as with any other charitable donation involving a quid pro quo.

Athletic directors turned to Congress for help. And lawmakers in Louisiana and Texas obliged, inserting language into legislation exempting the University of Texas and LSU. Other football schools lobbied that they should be exempt as well, and in 1988 Congress agreed, crafting language allowing fans to deduct 80 percent of the cost of buying season tickets, including mandatory donations, thus ensuring that the ticket schemes would not only survive but thrive.

In the two-plus decades since Congress intervened, college football has been transformed into a cash cow at many large athletic powers, accounting for half or more of all revenues. That money helps to subsidize less lucrative sports, athletic officials stress. But little of the money goes to support the academic mission. Instead, it gets plowed back into the athletic departments to pay for scholarships, ever-more luxurious training facilities and stadiums, escalating coaches salaries, as well as rising debt payments.

California’s seat plan, which includes nearly 3,000 of the best seats in the house, was designed to pay for $350 million in renovations at 60,000-seat Memorial Stadium. The school touts the VIP seats as providing “unprecedented benefits for decades to come.” For $40,000 to $225,000, fans can secure seats with catered food, premium beverages, flat-screen TVs and priority parking, among other amenities.

Cal officials call the payments a “pledge,” as opposed to a personal seat license. “A donor signs a pledge that will give them (sic) rights to their seats for 40 years,” university spokesman Dan Mogulof said in an email. “They also have the ability to cancel the pledge at any time.”

There is another difference between the plans: “Significant tax deductions may be available” for Cal donors, a brochure notes.

The rush to cash in on college football is not new. But with spending on athletics at epochal levels, the search for funds is becoming ever-more creative, fueling concerns that the tax breaks and ticket schemes are helping to fuel an unprecedented increase in athletic spending at the expense of education.

“The mission of the university is being subverted by the focus on athletics,” contends Nathan Tublitz, a biology professor at the University of Oregon and a member of a national organization hoping to reform college sports. He notes that top-ranked students in Oregon’s Honors College receive scholarships “of about $3,000. But a full scholarship for a football player including tuition, room and board, books, food, and all of the rest, is probably worth $40,000 or $50,000. That shows you the disconnect right there,” said Tublitz.

Spending on athletes at Oregon has soared 244 percent in the last decade, according to the university’s website.

“It’s a combination of we have more student-athletes and the costs of tuition keeps going up,” said Garrett Klassy, an assistant athletic director in charge of the Duck Athletic Fund, which includes the football ticket program. Oregon, like other football powers (the Ducks currently are ranked second in the nation), sets contribution levels according to the view. Club and box seats require donations of $1,200 to $1,800 per seat. Less attractive seats go for $100 to $800. All told, the school raised about $18 million from donations last year, Klassy said.

At No. 1 ranked Alabama, demand for season tickets is so great that there is a waiting list of 26,000 fans, according to Chris Besanceney, who oversees the TIDE PRIDE donor program. Only about 40 new fans managed to get tickets this season. Contribution levels run up to $2,000 per seat inside 101,000-seat Bryant-Denny Stadium. Overall, contributions have doubled in the last decade, to more than $25 million, records show.

Turnover is also rare at Georgia’s 90,000-seat Sanford Stadium. That causes “the minimum donation level to go through the roof,” said Jay Lowe, head of the donor program. “In 2008, for a new football donor, our cutoff was $10,651 (for a season ticket). Basically, it’s supply and demand.” Georgia collects about $22 million annually in donations.

At the University of Mississippi, only 20 percent of the 60,580 seats in Vaught-Hemmingway Stadium include a mandatory donation, according to Assistant Athletic Director Dan O’Dowd. Nevertheless, contributions are growing – $11 million in 2011. Some premium seats now require a separate $3,000-per-seat payment to help pay for new facilities – as well as a regular seat donation of $1,100 per seat.

For years, Penn State had one of the lowest ticket donation requirements – $100 a seat. But last year athletic department officials increased contributions for their best seats, up to $2,000 a seat. They also allowed longtime fans to transfer their tickets to family members and friends – but at a hefty cost. Fans had to make a mandatory donation of up to $2,000 for each ticket they transferred.

Associate Athletic Director Greg Myford said Penn State opted to include the transfer fee after realizing the athletic department needed more revenue to cover growing costs. Even with an athletic budget of $116 million annually, Penn State was at risk of falling behind.

“It was an opportunity for us to develop a new revenue source,” Myford said. The transfer fees raised about $3.8 million, with overall ticket contributions increasing to $17 million.